Relating to the investment of certain public funds in companies that are owned or controlled by Chinese military or government services

This bill relates to the investment of certain public funds in companies that are owned or controlled by Chinese military or government services. The bill defines “company” as any entity or business association, including all subsidiaries, parent companies, or affiliates of such entities or business associations, that exist for profit-making purposes. The bill defines “direct holdings” in a company as all securities of a company held directly by the public fund or in an account or fund in which the public fund owns all shares or interests. The bill defines “indirect holdings” in a company as all securities of a company held in an account or fund managed by one or more persons not employed by the public fund, in which the public fund owns shares or interests together with other investors not subject to the provisions of this new Code chapter 12K. The bill defines “prohibited company” as a company that is owned or controlled by Chinese military or government services and that meets criteria enumerated in the bill. The bill defines “public fund” as the treasurer of state, the state board of regents, the public safety peace officers’ retirement system, the Iowa public employees’ retirement system (IPERS), the statewide fire and police retirement system, or the judicial retirement system. The bill defines “scrutinized company” as any company that is owned or controlled by Chinese military or government services. The bill requires a public fund to identify all scrutinized companies in which the public fund has direct or indirect holdings within days following the effective date of the bill. Additionally, the bill requires a public fund to create and make available to the public a scrutinized companies list and review and update the list on a quarterly basis. The bill authorizes a public fund to review and rely on publicly available information and information from other sources when identifying scrutinized companies. The bill also authorizes IPERS to develop and issue a request for proposals for third-party services to complete the identification of scrutinized companies and the compilation of the scrutinized companies list. The bill requires a public fund to send notice to all companies on the scrutinized companies list on an annual basis informing the company of the requirements of the new Code chapter. The bill prohibits a public fund from acquiring publicly traded securities of a prohibited company. The bill requires a public fund to sell, redeem, divest, or withdraw all publicly traded securities of a prohibited company no later than days following the date the company becomes a prohibited company, or the effective date of the bill, whichever is earlier. The bill requires each public fund, within days after the scrutinized companies list is created or updated, to make the list available to the public. Additionally, the bill requires a public fund to make available to the public and file with the general assembly an annual report beginning October 1, 2021, and each October thereafter. The bill provides that, with respect to actions taken in compliance with the Code chapter, the public fund shall be exempt from any conflicting statutory or common law obligations, including any such obligations in respect to choice of asset managers, investment funds, or investments for the public fund’s securities portfolios. The bill provides that the provisions related to the creation of a scrutinized companies list, divestment of publicly traded securities of a prohibited company, and reporting shall not apply if the United States congress or president of the United States declares that mandatory divestment of the type provided for in this chapter interferes with the conduct of United States foreign policy, or a controlling circuit or district court of the United States issues an opinion that declares the mandatory divestment of the type provided for in the Code chapter or similar statutes of other states is preempted by the federal law of the United States.9111.